Finra Exam SIE Topic 2 Question 10 Discussion

Actual exam question for Finra's SIE exam

Question #: 10
Topic #: 2

[All SIE Questions]

In a rising interest rate environment, which of the following statements is true regarding the price of fixed-rate corporate bonds?

ATheir price will remain constant.

BTheir price will revert to par value.

CTheir price will appreciate in value.

DTheir price will depreciate in value.

Show Suggested Answer

Suggested Answer: D

When interest rates rise, the price of fixed-rate corporate bonds falls because the bond's coupon payments become less attractive compared to new bonds issued at higher rates.

D is correct as bond prices move inversely to interest rates.

A is incorrect because bond prices fluctuate with interest rate changes.

B is incorrect because bond prices revert to par only at maturity.

C is incorrect because prices do not appreciate when rates rise.

by My at May 05, 2025, 08:52 AM

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Ivette

9 days ago

Hold on, isn't option C the right answer? I remember something about bond prices appreciating in a rising interest rate environment. Gonna have to think this one through.

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Melissia

2 days ago

I'm not sure, but I think option B is the right answer. The price of fixed-rate corporate bonds should revert to par value.

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Isadora

3 days ago

I think option D is correct. Bond prices usually decrease when interest rates rise.

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Larae

19 days ago

Hmm, I'm not so sure about that. Didn't we learn in class that bonds revert to par value? I'm going with option B.

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Janessa

3 days ago

Yeah, I remember that too. Option B seems like the correct choice.

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Chun

8 days ago

I think you're right, bonds do tend to revert to par value.

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Pearline

9 days ago

I think you're right, bonds do tend to revert to par value.

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Daniel

24 days ago

Actually, fixed-rate bonds will depreciate in value in a rising interest rate environment, so the answer is D.

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Ashton

1 months ago

I'm not sure, but I think the answer is C.

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Tamra

1 months ago

Definitely option D. Everyone knows that when interest rates go up, bond prices go down. It's like a seesaw - one goes up, the other goes down.

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Ozell

14 days ago

It's a common misconception that bond prices remain constant in a rising interest rate environment. Option D is the correct answer.

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Hershel

29 days ago

That's right, when interest rates rise, fixed-rate bond prices fall. It's important to understand this relationship when investing.

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King

1 months ago

I agree, option D is the correct choice. Bond prices and interest rates have an inverse relationship.

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Hoa

1 months ago

I agree with Lynette, fixed-rate bonds will depreciate in value.

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Lynette

2 months ago

I think the answer is D.

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Glenna

2 months ago

I think option D is the correct answer. As interest rates rise, the price of fixed-rate corporate bonds will depreciate in value.

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Bok

16 days ago

I always get confused with bond pricing, but now I understand better. Thanks for clarifying!

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Terina

1 months ago

That makes sense. It's important to understand how interest rates impact bond prices.

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Lachelle

1 months ago

I agree with you, option D is correct. The price of fixed-rate corporate bonds will indeed depreciate as interest rates rise.

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